Mfg Leaders See Hope in CAFTA Defeat

Cleveland, July 28, 2005: The Northeast Ohio Campaign for American Manufacturing today said that Congress' vote on the Dominican Republic-Central American Free Trade Agreement (DR-CAFTA) reflects the growing lack of confidence in the direction of US trade policy.

Peter Accorti, VP of Talan Products in Cleveland, and Co-Chair of NEOCAM said, “Despite over a year of lobbying by global corporations and tremendous pressure from the Administration, CAFTA squeaked through with just a 2-vote margin. This shows that the time has come to recast the debate over US trade policy. There is serious division in Congress when it comes to US trade policy.” This view was echoed in a front-page Wall Street Journal article on July 29th entitled, "Cafta Vote Clouds Prospects for Other Trade Deals".

Nowhere is this more evident than among the congressional delegation of NE Ohio. “We found champions for a 21^st Century trade policy on both sides of the aisle,” Accorti said, and pointed to the heroic stance of Congressman Bob Ney (R-18), as well as Congresspersons Kaptur, Kucinich, Tubbs-Jones and S. Brown – all Democrats. Ney joined 26 other Republicans in voting against the bill.

“We are very disappointed in the position taken by Congressman Steve LaTourette (R-Painesville). He has been a strong defender of US based manufacturing up until last night,” Accorti said. “As late as Friday of last week he was a firm ‘no’ on CAFTA. But literally at the 11^th hour he buckled, despite the urging of leaders from business, churches, unions and other constituents to vote against CAFTA. We are very disappointed.” Accorti was also disappointed in Ralph Regula’s vote. “We thought getting Regula’s support was a long shot,” he said, “and at least he didn’t play both sides of the fence, but given the economic strain his district is under we thought we had a shot at getting him to vote no as well.”

According to Accorti, “The outmoded allegiance to an 18^th century theory of so-called ‘free trade’ is not in the best interests of American communities or our national or economic security,” Accorti said. “We need a comprehensive approach that results in reciprocal trade, and that creates jobs, with family-supporting wages, wealth and opportunities in American communities. As we’ve learned with NAFTA, and will see with CAFTA, the current trade regime does not accomplish this.”

Healthcare Costs

The rising cost of health care...

...in the US is driven by several forces. WIRE-Net members have complained for years to COSE, to the Legislature, to Congress (yes, even to WIRE-Net) about double digit increases in insurance for their employees, about passing those costs on to employees or trimming benefits. They've gone to high deductible plans, and shared cost information with employees, rewarded wellness...but the rates keep climbing.

WIRE-Net itself saw a 60% increase in our premium with Kaiser (thru COSE) this year.

So whats behind this? Several factors:

• Waste (up to 40% of health care costs is estimated by Industry Week to go for duplicative, or unnecessary procedures, wasted overhead, etc.).
• Expensive technology driven procedures that fix problems that were basically unsolvable in the "old days".
• Aging of the population, driving ever larger share of GDP being spent on health care...just wait a few years for the boomers to start retiring!
• Poor feedback: as Michael Porter puts it, the system is competing on the wrong levels.

My immediate question is this... given the complexities, can't the various key stakeholders in holding the line on health care costs agree that cutting out waste is a good first step? Lets form a NE Ohio "Lean Health Care" initiative, organize some big corporations, the unions, public agencies, one or two key insurers and help the health care providers streamline their operations. As I said above, Industry Week estimates that up to 40% of the bill is for wasted procedures, overhead and inefficiencies.

Even modest progress would give NE Ohio a competitive advantage over other regions in the US, and would help products made here be more competitive around the world to boot.

Where Manufacturing Matters

This is a new blog focused on the importance to the U.S. and communities across the nation of a strong, growing manufacturing base.

It will draw on the connections established by the staff and leadership of the Westside Industrial Retention & Expansion Network (WIRE-Net), in Cleveland, Ohio, USA, over the past 19 years.

For a glimpse of the work we do at WIRE-Net, see our website at www.wire-net.org.

More to come!

Defeating CAFTA is important to US Manufacturers

WIRE-Net is a founding member of the NE Ohio Campaign for American Manufacturing (www.neocam.org). Several leading Ohio manufacturers recently joined NEOCAM's Advisory Committee. Here's what one of them wrote in an open letter to Congress about the need for a new debate about US International Trade Policy.

Dave Johnson is President of Summitville Tiles, Inc., and also Chair of the Ohio Manufacturers Association. July 12, 2005
An Open Letter to Congress:

Is there anybody in Congress that is concerned about the economic consequences of our already astronomical and still growing trade deficit ($618 Billion in 2004) and the continuing loss of U.S. manufacturing jobs? This year, the trade deficit is already running $100 Billion above last year. Next year’s trade deficit will grow higher yet. I believe that a significant source of this serious problem is the nation’s continued commitment to poorly designed “free trade” agreements. The Dominican Republic – Central American Free Trade Agreement (DR-CAFTA) currently being considered is an excellent example. While its proponents argue that it will stimulate the U.S. economy, the reality is that CAFTA is little more than an outsourcing agreement for multinational corporations that will cost additional American factories and jobs. There are a number of reasons this for this:

1. The six countries involved with CAFTA have a combined GDP of $85 Billion…about the size of New Haven, Connecticut! Over 40 percent of the population of these countries live in poverty. These countries simply lack the purchasing power to become net consumers of U.S. goods. Even the most optimistic forecasts predict that DR-CAFTA will only add $1 Billion in U.S. exports, a drop in the bucket of our current trade deficit. Yet, DR-CAFTA would open up the U.S. market to more and more cheap imports, further undercutting American manufacturers.

2. CAFTA would allow for more “turn-around” exports – products shipped south for assembly and then back north for sale in the U.S. The result would be a net loss of U.S. textile and apparel jobs. Already one third of our trade with these countries is in “turn-around” exports.

3. Chapter Nine of CAFTA invalidates “domestic procurement” laws. This means that, at a time when many middle class American jobs are being outsourced, state and federal agencies would be barred from legislating “buy American” guidelines in their purchasing decisions.

4. Passage of CAFTA would greatly influence future U.S. economic policy. If Congress, the Executive Branch, and the multi-national corporate lobbyists are able to pass this trade agreement, the momentum in Washington will swing to those seeking further outsourcing agreements, such as the Free Trade Area of the Americas, the Doha Round, a new Andean Free Trade Agreement, and a host of new bilateral free trade agreements. We need to stop DR-CAFTA and start to re-think American trade policy so that our trade policies benefit all Americans, not just the WallMarts and the multi-national corporations.

In the final analysis, DR-CAFTA is nothing but a further assault on an already imperiled American middle class. If we are to realize our potential as a country, and retain the strong, broad middle class that is America’s singular political and economic achievement, we must fight to keep a vibrant manufacturing base and good jobs here in America. This means that we must resist the perceived short term benefits that cheap foreign goods bring to WalMart shoppers and instead focus on a national trade policy that ensures America’s long term viability as a manufacturing based world power.

Sincerely,

David W. Johnson

CEO ~ Summitville Tiles, Inc.
Chair ~ Ohio Manufacturers Association

Can the Yuan Float?

MANUFACTURERS CALL FOR CONTINUED U.S. PRESSURE ON CHINESE GOVERNMENT TO REVALUE CURRENCY

The Northeast Ohio Campaign for American Manufacturing (NEOCAM) calls on Congress to keep the pressure on the Chinese government to end currency manipulation. China announced on July 20th that it was revaluing the Yuan by 2 percent, and tying the Yuan’s value to a basket of currencies that will be evaluated daily, ending its longstanding peg against the U.S. dollar.

NEOCAM is a coalition of 900 Northeast Ohio manufacturing companies, industry and labor organizations that represents 90,000 Ohio workers and their families. NEOCAM has been calling for vigorous enforcement of fair trade laws and agreements. John Colm, Secretary of NEOCAM, states, “A mere 2 percent adjustment with a currency that is 40% undervalued means little. Every product made in China starts off with as much as a 40% cost advantage compared with U.S. made products – even before the product is shipped. This advantage has little to do with Chinese ingenuity, productivity or efficiency -- hallmarks of “free trade” -- and everything to do with government intervention in currency markets. This translates in the U.S. to lost sales and jobs, a weaker domestic manufacturing base, and a growing and unsustainable trade deficit.”

Colm said that NEOCAM’s concern now is that the turn of events in China becomes a distraction from other current global issues. “This is not a meaningful revaluation, and will only give apologists for the Chinese government ammunition in their campaign to persuade the public and Congress that China is ‘playing by the rules’. It will take the focus off the other key trade issue on the table, the Central America Free Trade Agreement (CAFTA).”

CAFTA is expected to come to the floor for a vote before the end of July. There is has been considerable pressure building about the need to put the so-called “free trade” agenda aside in order to develop a new approach to international commerce that results in reciprocal trade. The road we started down with NAFTA and now CAFTA is not working for American communities.”

NEOCAM is urging Congress to keep the pressure on China for meaningful revaluation and to vote against CAFTA. Both are crucial to preserving U.S. domestic manufacturing strength and maintaining our competitive advantage.

NE Ohio Campaign for American Manufacturing is a coalition representing over 900 NE Ohio manufacturing companies, the United Steelworkers of America, District 1 and 90,000 workers.

For information: www.neocam.org

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